HHS’s end of voluntary comment periods hit grantees hardest and Medicare providers least

The week

Some of the most important changes in government arrive in the driest possible form. On March 3, 2025, the Department of Health and Human Services published a short policy statement in the Federal Register, the government’s daily official journal of rules and notices. It had been issued by Secretary Robert F. Kennedy Jr. and filed on February 28. Its effect was to rescind something called the Richardson Waiver.

The name needs explaining. When a federal agency makes a regulation, the usual process is notice and comment. The agency publishes a proposed rule, anyone can send in comments, and the agency must consider them before issuing a final rule. It is the public’s chance to tell an agency that a rule will not work, and it gives everyone affected advance warning of what is coming.

The Administrative Procedure Act, the law that sets out how federal agencies make rules, exempts some subjects from that requirement, including matters relating to grants, benefits, contracts, loans and public property. In 1971, the Richardson Waiver committed HHS to use notice-and-comment rulemaking for those matters anyway, voluntarily. For more than five decades, organizations that received HHS grants or held its contracts got a chance to comment and, just as important, a warning before rules changed.

The March statement ended that commitment. HHS said it would follow the text of the Act and use notice and comment only where legally required, effective immediately.

The statement was brief, and its reasoning was stated plainly. The original waiver had been published in the Federal Register on February 5, 1971, and a 1982 proposal to write it into regulation had never been adopted. HHS said the waiver imposed obligations beyond the Act’s procedural requirements, citing the Supreme Court’s 2015 decision in Perez v. Mortgage Bankers Association. It said the waiver added costs for the department and the public, hindered efficient operations and limited the department’s ability to respond quickly to legal and policy mandates.

The statement left some discretion in place. HHS agencies and offices could still choose to use notice and comment for exempt matters, but would no longer have to. The waiver had also told the department to use the Act’s “good cause” exception sparingly. That exception lets an agency skip comment when it finds the process impracticable, unnecessary or contrary to the public interest. The new statement said the exception should be used in appropriate circumstances, consistent with the Act.

Observers did not have to imagine what that could look like. A month earlier, the National Institutes of Health had capped “indirect cost” rates on research grants at 15 percent, in a notice issued without comment and effective almost at once. Indirect costs are the shared expenses of doing research, such as laboratories, utilities, safety compliance and administration, that grants reimburse on top of the direct costs of a specific project. A federal court in Massachusetts had blocked the cap.

The sequence had been fast. NIH issued the notice on Friday, February 7, to take effect the following Monday, February 10. On February 10, twenty-two states, along with medical, research and higher education associations and universities, sued in federal court in Massachusetts, and a judge temporarily blocked the cap that day. The litigation was still running when the Richardson Waiver was rescinded.

The rescission also fit a wider pattern. On February 19 the President had signed an executive order directing agencies to review their regulations for ones to rescind or modify, as part of a broad deregulatory effort. Within HHS, policy was changing through many channels at once. On March 4, the day after the Federal Register publication, the Centers for Medicare & Medicaid Services rescinded its earlier guidance encouraging states to address health-related social needs through Medicaid. That guidance had been issued, and was withdrawn, through informational bulletins of the kind that never went through comment.

Commentators were quick to note an important limit. Medicare rules were largely unaffected, because the Medicare statute separately requires notice and comment for most substantive regulations. So the waiver’s rescission did not land evenly. Whether it mattered a great deal or hardly at all depended on how an organization made its money from HHS.

Medicaid was the less obvious case. Because it is a federal grant program to the states, its regulations fall within the Act’s exemption for grants and benefits. For decades they had gone through notice and comment largely because of the Richardson Waiver. After March 3, formal Medicaid rules, like grant rules, could in principle be issued without it, unless another law required comment for a particular provision.

A change to rulemaking procedure rarely reaches a boardroom. This one should have. Notice and comment gives regulated organizations two things: a chance to shape a rule, and warning that a rule is coming. For decades the Richardson Waiver had extended both to parts of HHS’s work where the law did not require them. Its rescission removed them there, but not everywhere, and the difference is the useful part.

A health organization relates to HHS in up to three ways, and each carries a different level of procedural protection after the change. As a grant recipient, it lost most of its warning. As a contractor or vendor, it was always governed mainly by contract and procurement law, so it lost less. As a provider or plan in Medicare, it kept most of its warning, because a separate statute requires it. Medicaid sits in between. Mapping an organization’s revenue across these three relationships shows how much of it is now exposed to change without comment.

Few organizations sit in only one relationship. A research-intensive academic medical center typically holds NIH grants, bills Medicare and Medicaid, and may hold federal contracts for research or data work. A community health center usually combines a federal health center grant with Medicaid and Medicare payment. A state or county health department depends on cooperative agreements and on the state’s Medicaid program. A health IT firm may hold federal contracts while its main customers are state Medicaid agencies. The rescission applied only to HHS, so grants from other federal departments followed their own procedures. For each organization, the mix decides the exposure.

Why warning is worth money

For a non-lawyer, it is easy to see notice and comment as a formality: a long document, a comment deadline, and then the rule the agency wanted all along. That underestimates it. The process works a bit like the planning permission system for a building project. Neighbors can object, and sometimes their objections change the design. But even when they do not, everyone knows months in advance that construction is coming and can plan for it.

For a health organization, that lead time has a direct financial value. A research university that knows a change to grant terms is proposed can model its effect, talk to its staff and adjust hiring before the change lands. A hospital that sees a proposed payment rule can budget for it. Without notice, the same change arrives as a surprise, and the organization has to absorb it from cash while it works out what to do.

Two other terms are useful. A grant is federal money given to an organization to carry out a public purpose, such as research or community health, under terms the agency sets. A cooperative agreement is similar, but with the agency more closely involved in the work. A contract, by contrast, is a purchase: the government buys a service or product. The relationship is governed by the contract and by federal procurement law, the body of rules on how the government buys things.

The distinction matters because the Administrative Procedure Act treats these relationships differently. Grants and contracts were among the matters it exempts from mandatory notice and comment. The Richardson Waiver had voluntarily filled that gap at HHS. Medicare, meanwhile, has its own statute that requires comment for most substantive rules, waiver or no waiver.

What the Act requires, and what it never required

Section 553 of the Administrative Procedure Act sets out the default procedure for rules. It exempts matters relating to agency management or personnel, and to public property, loans, grants, benefits or contracts. Separately, it exempts interpretive rules, general statements of policy and rules of agency organization from notice and comment for every subject. And it allows an agency to skip comment for good cause, if it explains why.

So even with the Richardson Waiver in place, much of what HHS did never went through comment. Guidance documents, policy statements, notices of funding opportunity and grant terms in award notices were all issued without it. The waiver covered the layer of formal regulations in exempt subjects. Its rescission removed comment from that layer, which is the layer with the force of law.

The constraints that remain

Removing comment does not remove judicial review. An agency action can still be set aside as arbitrary and capricious if the agency fails to give a reasoned explanation. In DHS v. Regents in 2020, the Supreme Court held that an agency rescinding a policy must consider the reliance interests of those affected. In 2024, in Loper Bright, the Court ended the practice of deferring to agencies’ reasonable readings of ambiguous statutes, so courts now read the statute for themselves.

Those doctrines give regulated organizations real arguments. They are arguments made after the fact, in litigation, rather than warnings received in advance. And without a comment record, an organization may have to build its evidence of harm from scratch while the policy is already in force.

Analyses that fall away with comment

Notice and comment also triggers other obligations. The Regulatory Flexibility Act requires agencies to analyze a rule’s effect on small entities, including small nonprofits and small local governments, but only for rules that must go through notice and comment. When comment is no longer required, that analysis is no longer required either. For a small community health center or a county health department, the formal assessment of how a rule would affect organizations like it can disappear along with the comment period.

Some checks survive. Significant rules can still go through review by the White House Office of Information and Regulatory Affairs before publication, and the Congressional Review Act still requires rules to be submitted to Congress. Those checks run inside government. They give a regulated organization no structured way to put its own evidence on the record.

Grant recipients: the largest loss of warning

Academic medical centers, research institutes, community health centers and public health departments depend on HHS grants and cooperative agreements. Grant terms, indirect cost policy, allowable costs, eligibility and priorities can now change through notices and policy statements with immediate effect. The NIH indirect cost notice showed what that looks like: a change worth large sums to research institutions, announced on a Friday and effective the next business day.

To see why indirect costs matter so much, consider how a research building runs. Its electricity, ventilation, animal facilities, safety officers, grant accountants and IT support do not belong to any single project, but none of the projects could run without them. Grants reimburse a share of those costs through an indirect cost rate. Cut the rate sharply, and the institution must either find the money elsewhere or reduce the shared services that every project relies on.

Where grant terms actually come from

A grant recipient’s obligations come from several layers. At the top is the program statute that authorizes the grant. Next come the government-wide rules for federal awards, the Uniform Guidance at 2 CFR part 200, as adopted by HHS. Then come agency policy statements such as the NIH Grants Policy Statement, the funding announcement, and the terms and conditions in each notice of award. Many of the changes that matter most to a recipient arrive through the lower layers, which were never subject to comment.

Indirect cost rates show how the layers interact. Most research universities and academic medical centers negotiate their rates with a federal cognizant agency, often HHS’s own Cost Allocation Services, based on audited costs. The Uniform Guidance generally requires agencies to accept those negotiated rates, with deviations allowed only under specific conditions. Organizations without a negotiated rate may use a de minimis rate, raised from 10 to 15 percent in the 2024 revision of the Uniform Guidance. The NIH cap would have applied that 15 percent figure to institutions whose negotiated rates were often far higher.

Discretionary grants and formula grants

Grants also differ in how much room an agency has to change them. Formula and block grants, such as the substance use and mental health block grants to states, are distributed under statutory formulas. An agency can change administrative terms but not the basic allocation. Discretionary grants, including most NIH research awards and many HRSA and CDC programs, give the agency far more latitude over priorities, terms and continuation. A recipient whose funding is mostly discretionary carries more exposure to changes without comment than one funded mostly by formula.

Continuation decisions are another pressure point. Multi-year grants are usually funded one budget period at a time, subject to available funds and satisfactory progress. An agency can change priorities at a continuation point without amending any regulation. Recipients should know the next continuation date for every major award, because that is when terms are most likely to change.

The practical consequence of the rescission is less lead time, so planning has to substitute for it. Research finance teams can model the effect of plausible changes, such as lower indirect cost rates or new certification conditions, on each department and on the institution’s cash position. They can identify which grant-funded positions and commitments would be hardest to unwind, and decide in advance what bridge funding, if any, the institution would provide.

Suppose a mid-sized university medical school receives most of its research funding from HHS. Its finance office builds three scenarios: a modest reduction in indirect cost recovery, a severe one, and a new certification condition that some grants might not be able to meet. For each, it calculates the effect on every department and on the institution’s cash over twelve months. It then lists the commitments that would be hardest to reverse, such as graduate students mid-degree and multi-year clinical studies. The board agrees in advance which of those it would protect with bridge funding, and for how long. When a change is announced, the institution is choosing between options it has already priced, rather than starting from scratch on a Monday morning.

Legal challenges remain available, and courts proved receptive to some in 2025, but litigation is slow and its outcome uncertain. Counsel should advise on what procedural protections still apply to specific programs, since some program statutes impose their own requirements.

The forum matters as well. Challenges to the lawfulness of a policy are usually brought in federal district court under the Administrative Procedure Act. Claims for money owed under a specific grant may belong instead in the Court of Federal Claims, which has narrower remedies and different timelines. Which court hears a dispute can decide how quickly relief arrives, if at all, so counsel should assess it early.

Comment still has a role where it is offered. Some grant-making components continued to publish requests for information, and associations still met with agency staff. The difference is that participation became optional for the agency, so influence shifted toward relationships and data. Certifications deserve particular care. When a grant term requires a recipient to certify compliance with a condition, and payment depends on that certification, a false or careless certification can create exposure under the False Claims Act. New certification terms, arriving with little warning, should go to counsel and compliance before anyone signs, with a record of how the organization satisfied itself that the statement is true. An institution that can quickly show, with its own figures, how a proposed change would affect patients, trainees or research output gives its association something concrete to bring to those meetings. Preparing that evidence before a change is announced, for the policies most likely to move, is the closest substitute for a formal comment period.

What a change without comment feels like on the ground

The difference is sharpest inside a smaller grant recipient. Take a community health center that runs a federally funded program for patients with chronic conditions in a rural county. Its grant pays for two nurses, a community outreach worker and part of a data analyst’s time.

Under the old approach, a significant change to the program’s terms would usually have appeared first as a proposal. The center’s director would have heard about it through her association, read a summary and perhaps joined a call where peers compared notes. She might have sent in a short comment explaining how the change would affect patients in a rural setting. Even if the final rule went ahead unchanged, she would have had months to adjust staffing, talk to her board and look for other funding.

Without that step, the first she hears may be a notice that takes effect immediately or within days. The questions arrive all at once. Can the outreach worker still be paid this month, and do the new conditions apply to money already spent? Must something be certified by a deadline, and who can explain what the notice actually means? Small organizations rarely have in-house lawyers or grant specialists, so the burden falls on a director who is also running a clinic.

Not every such change is harmful; some may be modest or easy to absorb. But the cost of surprise falls hardest on organizations with the least capacity to absorb it. The planning, evidence and monitoring steps described here therefore matter most for smaller grant recipients, and their associations, which can pool expertise, become more valuable when formal comment is no longer guaranteed.

Steps that fit a small organization

A small grant recipient cannot build a policy shop. It can do a few things cheaply. It can keep a one-page summary of each award, listing the budget period, the next continuation date, the program officer and the terms most likely to change. It can join the association that tracks its program and read its alerts. It can agree with its board, in advance, how many months of payroll it would cover from reserves while a funding question is resolved. And it can keep records clean enough that, if an award is terminated, its allowable closeout costs are easy to document.

Subrecipients face an added layer. Many community organizations receive federal money through a state or a larger institution, not directly from HHS. When federal terms change, the pass-through entity must decide how to apply them, and the subrecipient hears last. Agreements with pass-through entities should say how quickly changes will be communicated and how costs incurred before a change will be treated.

Contractors and vendors: exposure through the contract, not the rule

Health IT firms, consultancies, research organizations and service providers that contract with HHS agencies were less dependent on the waiver to begin with. Their rights sit mainly in their contracts and in federal procurement law, which continued to apply. What changed in early 2025 was the policy environment around contracts. Agencies reviewed and terminated contracts across government as part of a broad effort to cut spending, and new conditions could be attached to awards with little notice.

For contractors, the controls are commercial. Review termination-for-convenience provisions and what costs they allow to be recovered. “Termination for convenience” is a standard clause in government contracts. It lets the government end a contract when it decides doing so is in its interest, even if the contractor has done nothing wrong. The contractor is typically entitled to recover certain costs, and the details matter. Track which contracts depend on discretionary priorities rather than statutory mandates, since the latter are harder to cancel. A contract that supports a program Congress has required by law is on firmer ground than one supporting an initiative an agency chose to pursue. Shorten planning horizons for renewals and diversify the customer base where possible.

How termination works

The rules for a terminated contract are set out in Part 49 of the Federal Acquisition Regulation. After a termination for convenience, the contractor generally must submit a settlement proposal, usually within one year. It can recover allowable costs incurred for work performed, reasonable settlement expenses and, for fixed-price contracts, a reasonable profit on work done, but not anticipated profit on work not performed. Disputes go through the Contract Disputes Act, first to the contracting officer and then to a board of contract appeals or the Court of Federal Claims.

Recovery depends on records. A contractor that tracks costs by contract and task, documents subcontractor commitments and keeps clean time records will recover more, faster. One that has to reconstruct its costs after a termination will spend months doing so and will lose some of them. Subcontractors have no direct claim against the government and depend on the prime contractor to pass their costs through.

Contractor or subrecipient

Some organizations are paid with federal grant money without realizing that they are subrecipients rather than contractors. The Uniform Guidance sets out how a pass-through entity decides which relationship applies. A subrecipient carries out part of the federal program and takes on grant obligations. A contractor provides goods or services to the recipient. The distinction decides which rules govern a change: grant terms, which can now change with less warning, or the commercial contract. Organizations should check how each of their federally funded agreements is classified.

Options and recompetes

Termination is the dramatic risk. The more common one draws less attention: an option period that is not exercised, or a recompete delayed or rewritten with a narrower scope. Neither requires any rule change, and neither gives the contractor a claim. A contractor should track every option date and recompete on its major HHS work. Each one is a decision point the agency controls, and each needs a plan for staff and subcontractors if the answer is no.

A contractor that serves both HHS and states running HHS-funded programs should map how a federal change would flow through to its state work, because state agencies often adjust within weeks. A health IT company, for example, might run a federal data contract and also support eligibility systems for several state Medicaid agencies. A federal funding or policy change could hit both at once, through different channels and on different timelines. Seeing that connection in advance lets the company plan staffing and cash for the combined effect rather than discovering it in two separate crises.

Medicare providers and plans: protected by statute, with a Medicaid gap

Hospitals, physicians and health plans in Medicare are the best protected. The Medicare statute requires notice and comment for most rules that set or change substantive standards for payment and coverage. The annual payment rules continued to move through proposed and final stages, with comment periods intact. For a hospital, the fee schedules and payment systems that drive most Medicare revenue still arrive with months of warning.

What the Medicare statute protects

The Medicare provision is section 1871 of the Social Security Act. It requires that any rule establishing or changing a substantive legal standard governing the scope of benefits, payment for services or eligibility be issued as a regulation. It generally requires a comment period of at least 60 days. In Azar v. Allina Health Services in 2019, the Supreme Court held that this requirement reaches further than the Administrative Procedure Act’s, covering some policies that the Act would treat as interpretive. Medicare providers therefore have stronger procedural protection than almost anyone else in health care.

The protection has edges. Voluntary payment models run by the CMS Innovation Center operate through participation agreements, which look more like contracts. Program instructions and manual provisions that only interpret existing standards can still change without comment. Medicare Advantage plans receive their annual payment parameters through a statutory process of advance notice and final announcement, with its own timeline. A provider’s exposure inside Medicare depends on which of these channels its revenue runs through.

Where comment remains, its value depends on how it is used. Comments that give specific evidence, such as the effect of a proposed payment change on a defined group of patients or services, carry more weight than general objections. Many providers rely on their associations to file detailed comments and add short letters with their own figures. Keeping the data needed for those comments ready, rather than assembling it each year under a 60-day deadline, makes the remaining comment periods worth more.

Medicaid is different. It runs through federal-state partnership and relies heavily on guidance, state plan amendments, waivers and letters to state officials, much of which was never subject to notice and comment. A state plan amendment is how a state changes the rules of its own Medicaid program with federal approval. A Medicaid waiver, a different use of the word from the Richardson Waiver, is federal permission for a state to run parts of its program outside the usual rules. Changes through these channels can matter as much to a provider as any formal regulation.

Where the Medicaid warning moves

The rescission affected Medicaid at two levels. Formal federal Medicaid regulations, which had gone through comment under the waiver, became eligible to skip it. Federal guidance, which had never gone through comment, kept changing as before, as the March 4 rescission of the health-related social needs guidance showed. In both cases, most effects reach providers through the state, which has to amend its state plan, waiver or managed care contracts to implement them.

That state step is where much of a provider’s warning now comes from. State plan amendments often require public notice, especially for changes to payment rates. Many states’ own administrative procedure acts require comment on state rules. Medicaid waivers under section 1115 carry federal and state transparency requirements, including public comment periods. A provider that follows its state Medicaid agency closely often sees a federal change coming through the state process even when the federal step had no comment period.

Providers with large Medicaid populations therefore need to watch guidance and waiver decisions as closely as formal rules, and to follow their state Medicaid agency, where federal changes take effect. For a hospital whose revenue is split between Medicare and Medicaid, the practical picture after March 2025 was mixed: strong warning on one side of the business and weaker warning on the other.

How to see your own exposure

The most useful single exercise for a health organization is to map its revenue by relationship with HHS. Take total revenue and split it into four buckets: HHS grants and cooperative agreements, HHS contracts, Medicare, and Medicaid. For each bucket, note the level of procedural protection now in place: low for grants, contract-based for contracts, strong for Medicare and mixed for Medicaid.

The result is a simple picture of how much of the organization’s income could change with little or no warning. A research-intensive academic medical center might find a large share in the low-protection bucket. A community hospital dominated by Medicare might find very little. A safety-net hospital might find its biggest exposure in Medicaid guidance and state decisions. Each of those organizations should plan differently, and the map tells them how.

Refining the map

A first map by relationship can be refined in two ways. The first separates revenue by how fast it could change. Discretionary grants can change at the next continuation date, contracts at the next option period, Medicaid at the next state budget and Medicare at the next annual rule. The second separates revenue by how hard it would be to replace. Medicare revenue lost through a payment cut cannot be replaced from another source, while a lost research grant might be partly bridged by other sponsors.

A map built this way shows how much revenue is exposed, and also when and how badly. It points to the few items that need priced scenarios, which is usually a handful of large discretionary awards, a contract or two and the state Medicaid decisions with the largest payment effect.

Across all three relationships, early warning now depends more on the organization’s own monitoring. In many health organizations, government relations, compliance, the research office and finance each watch a different part of HHS. Combining those signals into a short monthly executive briefing, organized by relationship and revenue at stake, turns scattered awareness into planning and gives the board a single view of regulatory exposure.

Ownership should follow the relationships. The research office or sponsored programs office usually owns grants, and procurement or contracts staff own federal contracts. Reimbursement and revenue cycle leaders own Medicare, and government relations or a Medicaid policy lead owns the state program. One executive, often the chief financial officer or chief compliance officer, should own the combined view. Each owner should know the dates that matter most in their area, such as continuation dates, option periods, the annual Medicare rule cycle and the state budget calendar.

The briefing can be short. A page or two each month, with a section for each relationship, is enough. For each item it should say what changed or is expected to change, which revenue it touches and how much warning the organization has. It should also say who owns the response and what decision, if any, is needed from leadership. Items move from “watching” to “planning” to “acting” as they develop, and the board sees the same format every month. The discipline is less about gathering more information than about putting what the organization already knows in one place, in terms of money and decisions.

Planning for less warning

An organization in good shape knows its exposure map, has priced the most plausible changes for the riskiest bucket and has decided in advance how it would respond. It receives one coordinated monthly view of what is moving at HHS and in its states. It keeps evidence ready to share with its associations and maintains working relationships with agency staff, because those are now the main channels for influence where formal comment is not offered.

The organizations caught out tended to make the same errors:

• Treating the rescission as a legal technicality rather than a change in how much warning the organization will get.
• Assuming all HHS revenue is equally protected, when Medicare and grants now sit at opposite ends.
• Relying on litigation as the plan, when it is slow and uncertain. A court win months later does not pay salaries in the meantime.
• Waiting for certainty before modeling anything, which guarantees that the first serious analysis happens after the change has already taken effect.
• Watching formal Medicaid rules while missing guidance, waivers and state decisions.
• Leaving monitoring scattered across departments, so that no one sees the whole picture until a change has already landed.

The case that little changed

A fair counter-argument holds that the rescission mattered less than it seemed. Comment periods rarely changed an agency’s mind on its central choices. Agencies already used interim final rules and the good cause exception when they wanted speed. Most grant terms already arrived through guidance and award notices. And HHS components remained free to seek comment whenever they chose.

There is also an argument from speed. When Congress sets short deadlines, as it later did for parts of the 2025 reconciliation law, comment periods can make implementation harder. Some statutes deal with this by authorizing interim final rules directly.

Those points are fair as far as they go. The value of comment to a regulated organization was mostly warning and a public record, and those were real. The default had also shifted. Under the waiver, skipping comment required a reason. After the rescission, offering it required a choice. In a year of rapid policy change, that shift in default made sudden changes more likely in the exempt areas.

What the board should see

Boards respond to a few consistent measures. They include the share of revenue in each protection level, the largest single exposure and its next decision date, and the reserves committed to bridge funding. A further measure is the number of open changes in the monthly briefing at each stage. Audit and compliance committees may also want evidence that the monitoring runs: briefing dates, attendance and decisions taken.

Where the exposure sits, relationship by relationship

1. What share of our revenue comes from HHS grants, HHS contracts, Medicare and Medicaid, and how much warning would we now get of a change in each?
2. Have we modeled the effect of plausible grant policy changes, such as lower indirect cost rates, on each department and on our cash?
3. What do our federal contracts say about termination for convenience, and which of them support programs required by statute?
4. Who watches Medicaid guidance, waivers and our state agency’s decisions, and how quickly does that reach finance?
5. Does the board receive a single monthly view of regulatory exposure across all our HHS relationships?

With hindsight

The rescission stood through 2025. Over the year HHS changed many grant terms, attached new conditions tied to administration priorities and terminated grants in deprioritized areas, often with little notice. Many of those actions were challenged in court, with mixed results.

Some of the largest actions came within weeks. In late March 2025, the Centers for Disease Control and Prevention terminated about $11 billion in pandemic-era grants to state and local health departments, and a coalition of states challenged the terminations in court. On March 27, HHS announced a restructuring that would cut its workforce by about 20,000 positions and consolidate its divisions. Fewer program staff meant fewer of the informal contacts that grant recipients had relied on for early signals.

The courts also narrowed one route to relief. In April 2025, in a case about Department of Education grants, the Supreme Court indicated that suits seeking payment under terminated grants likely belonged in the Court of Federal Claims. In August 2025, in a case about NIH grant terminations, a divided Court applied similar reasoning. It paused a lower court order reinstating terminated grants, while leaving in place the ruling against the guidance behind them. For grant recipients, getting money back after a termination became slower and less certain, which made advance warning more valuable.

Certifications became a second front. In May 2025 the Justice Department announced a Civil Rights Fraud Initiative. It would use the False Claims Act against recipients of federal funds who knowingly certified compliance with civil rights laws while violating them. For grant recipients, a certification added to an award with little notice could now carry significant liability, which raised the stakes of reading new terms before accepting them.

The shift also went beyond HHS. In April 2025 a presidential memorandum directed agencies to repeal regulations they judged unlawful under recent Supreme Court decisions, and to use the good cause exception to skip comment where appropriate. HHS’s rescission turned out to be an early instance of a broader move away from voluntary procedure.

Grant policy kept moving by executive action. In August 2025 the President signed an executive order on federal grantmaking that required senior appointees to review funding announcements and awards. It also directed changes to the Uniform Guidance to allow termination of grants for convenience. Contractors faced their own change as the Federal Acquisition Regulation was rewritten during 2025 under a broad overhaul.

The NIH indirect cost cap, the example that had made the stakes clear in February, did not survive. A federal district court permanently blocked it in April 2025. In January 2026 the First Circuit, the federal appeals court covering Massachusetts, affirmed that decision, relying in part on an appropriations rider and on HHS’s own regulations. An appropriations rider is a provision attached to a spending law; here, it was part of the reason the court found the cap could not stand. The outcome is a reminder that removing a voluntary procedural commitment does not remove every legal constraint. Statutes, spending laws and an agency’s own existing regulations still apply.

Medicare payment rules kept moving through notice and comment, as the statute requires. Hospitals and physicians continued to see proposed payment rules months before final ones and to comment on them.

The pattern matched the exposure map set out here. Grant-dependent organizations, particularly academic medical centers and community-based providers, faced the most abrupt changes. Medicare-dominated providers had the most notice. Medicaid-heavy providers found the decisive changes arriving through legislation and state implementation rather than through HHS rulemaking.

Procedural rights turned out to be a form of financial protection, and they are not distributed evenly. Two organizations with similar total revenue from HHS can face very different levels of risk depending on whether that money arrives as grants, contracts or Medicare payments.

No one can predict every policy change. The practical response is to know where the organization is exposed, to price the most plausible changes in advance and to build the monitoring that formal comment periods used to provide. Organizations that did that in early 2025 spent the rest of the year making decisions they had already thought through. Those that did not spent it reacting.